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8/9/2007
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Vonage Cuts Losses, Develops 'Workarounds' To Counter Verizon Patents

Vonage reported that revenue for the second quarter jumped 43% to $206 million while its adjusted loss from operations narrowed to $18 million from $60 million a year ago.

Vonage Holdings reported Thursday that it has developed "workarounds" to key Verizon Communications patents that were at the heart of potentially devastating litigation that the start-up VoIP firm lost to Verizon.

Also Thursday, Vonage reported that its revenue for the second quarter jumped 43% to $206 million while its adjusted loss from operations narrowed to $18 million from $60 million in the second quarter a year ago.

Previously, Vonage had been pessimistic about its chances of developing ways of overriding the offending patents so it could continue providing its service.

"We have substantially completed the deployment of workarounds for the two name translation patents and have completed the development of the wireless patent workaround," said Vonage chairman and chief executive Jeffrey Citron, in an e-mail message. "This is a significant step toward moving ahead with our business in the wake of the Verizon litigation."

Vonage, which had maintained that Verizon was seeking to put it out of business, fought an injunction that sought to limit its business to calls between its customers. Vonage, however, won the right to continue in business, although at a greatly reduced manner.

The VoIP company reported only 57,000 net subscriber line additions. Vonage, which offers several VoIP calling plans, said it finished the quarter with 2.45 million lines. A typical calling plan costs about $25 a month.

Vonage said it picked up some SunRocket subscribers, who were left without service a few weeks ago when the VoIP firm suddenly ceased operations.

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